An appeal is to be launched by administrators selling the assets of Monarch Airlines after a court ruled that they could not sell the failed carrier’s airport landing slots.

Two High Court judges ruled that Airport Co-ordination Ltd (ACL) was within its rights in not granting landing slots to Monarch, which went into adminstration on October 2.

The ruling is a blow to Greybull Capital, the private equity firm that is Monarch’s former owner and is its principal secured creditor.

Blair Nimmo, partner at KPMG and joint administrator, said: “We are disappointed with today’s ruling and will be seeking leave to appeal as a matter of urgency.”

The collapse of the airline led to 1,858 workers being made redundant and the flights and the holidays of about 860,000 people being cancelled.

Lord Justice Gross and Mr Justice Lewis heard argument that, if received by Monarch, those slots would represent its “most valuable asset”, which it would seek to exchange with other airlines “to realise value for its creditors”.

Bankim Thanki, QC, argued that the approach taken by ACL was “unlawful”, submitting: “ACL has no lawful power to refuse to allocate these slots or to ‘reserve’ them pending determination of proposals to revoke or suspend MAL’s [Monarch Airlines] operating licence.”

But the judges rejected the claim that ACL was under a duty to allocate the summer 2018 slots to Monarch “by reason of historical precedence”.

Lord Justice Gross said: “Whatever flexibility and discretion ACL enjoys in other circumstances to reserve (or postpone) a decision, it is no longer entitled to reserve its decision on the summer 2018 slots on the facts of this case.

“That would be to sterilise or distort part of the market, to the potential detriment of third parties, for an uncertain period of time. Accordingly, the consequence of our decision is that the summer 2018 slots are to be placed in the slot pool.”

Slots at Manchester and Birmingham airports will now go back into the slot pool to be allocated 50% to new entrants and 50% to incumbent operators as required by the slots regulation.

The court has order a stay of its decision in respect of the slots at Gatwick and Luton until November 17, pending an application for permission to appeal by the administrators.

As a result, slots at Gatwick and Luton which were formerly operated by Monarch remain unallocated in the short-term.

“ACL awaits with interest the full judgment of the court, and any further guidance it may provide on how the slot allocation process should best operate in accordance with the slots regulation in future,” ACL said.

“ACL recognises the commercial interests of airports and airlines – and their administrators.

“However, in order to fulfil its role as coordinator under the slots regulation it must seek to ensure that slots at congested airports are allocated to air carriers on the basis of neutral, transparent and non-discriminatory criteria, with a view not only to respecting the entitlement of existing airlines to slots, but also with a view to facilitating competition and encouraging new or existing airlines into new markets.

“ACL must also allocate slots with the aim of securing efficient use of airport capacity.

“In ACL’s view it was not consistent with its role for it to be allocating slots to an undertaking which had ceased to have any realistic prospect of operating again and whose operating licence was subject to a proposal to revoke by the licensing authority.”

A Greybull spokesman told The Times: “This is a matter for KPMG acting as administrators. Greybull can do little more than await the outcome of the process.”

Tim Hawkins, spokesman for Manchester Airports Group, said: “Today’s judgment recognises just how important it is for Monarch’s runway slots to be re-allocated quickly so that other airlines can operate new services.

“Any further delay would have been damaging for consumers and the UK economy, and we welcome the clarity on the need for ACL to press ahead with allocation for the next summer season.”

Wizz Air chief executive József Váradi declared that he had a “profound interest” in Monarch’s slots at Luton airport, where it bases four aircraft.

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